Use the following information for the next two questions. Firms X and Y have the following borrowing costs: Company X Company Y Fixed-Rate Borrowing Costs Floating-Rate Borrowing Costs 9.5% 7.5% LIBOR +1.25% LIBOR A swap bank offer the following quote for an interest only swap: 7.1-7.6 (against LIBOR) 1) X wants a fixed loan. What would be their all in cost if instead of getting a fixed loan directly they initially get a floating loan and swap it using the above quote? a. 8.5% b. 8.85% C. 8.95% d. 8.65% e. None of the above

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Question 5.A bank has borrowing needs at timeT >0. Show that by combining an FRAtrade today with a libor loan at timeT, the bank can today lock in its interest cost forthe periodTtoT+α. Does the borrowing bank need to buy or sell the FRA to do this?What is the fixed rate that the bank locks in?

No need to define law of one price and what drives law of one price. I just wanted I need illustration with two examples of these questions..

6. Calculating simple interest and APR on a single-payment loan You are taking out a single-payment loan that uses the simple interest method to compute the finance charge. You need to figure out what your payment will be when the loan comes due. The equation to calculate the finance charge is: FsFs = P     r       t   In the equation, FsFs is the finance charge for the loan. What are the other values? P is the    amount of the loan.   r is the stated    rate of interest.   t is the term of the loan in    .   You’re borrowing $4,000 for a year and a half with a stated annual interest rate of 10%. Complete the following table. (Note: Round your answers to the nearest dollar.)

Consider 1-factor model and assume that the price of a certain fixed income security P(y) for y=9%, 9.05% and 8.95% is given by P(0.09)=$5,000; P(0.0905)=$4,980; P(0.0895)=$5,030. Find the estimate for DV01, Duration, and Convexity of this security. Keep at least 4 decimal digits while performing your calculations.

I need answer of this question solution general finance

Basic Finance problem When Buying T-Bills, the dealer who offers the highest price will earn the? Select the best of the following solutions: a. Best yield b. Highest yield c. Competitive yield d. Lowest yield

This is part a) question and it's answer in order to answer part b) question Question: You hold a consol that pays a coupon C in perpetuity. The current interest rate is i, and the average expectation in the market is that this will remain unchanged. What will be the price of the consol today? answer : According to the question we need to calculate the current price of the perpetual consol. Perpetual consoles are priced differently because their expected income is spread through an indefinite period. So, perpetual consoles are priced using the current yield.  The current yield is calculated as:- coupon amountMarket price×100coupon amountMarket price×100 After calculating the current yield price is calculated by the above formula where, i = Current interest rate  y = yield so, the price of this consol will be  Price = i/y I please need the solutions for part b)  question b)  In the next period however, the interest rate changes unexpectedly to i . What is the new price of the bond? If…

5. (Replicating strategy for pricing) To price a derivative, we can use risk-neutral pricing. As an alternative yet equivalent method, we can construct price the derivative using replicating strategies. Consider a 1-period binomial model, where we have three nodes No.0, N1.0, N1.1. We have a cash account with fixed interest rate r = 0.01 - that is, if we have at No.0 cash account with D dollars, we expect (1+ r)D at either N1.0 or N1.1. We also have a stock with price S0.0 10 at No,0, S1,0 = 8 at N1,0 and S1,1 = 15 at N1,1. Now consider an European call option at time t = 1 with strike K = 12. Can you price the option at No.0 using a replicating strategy, and what is the price? Please submit your answer rounded to only one decimal digit - for example if your answer is 1.28, then submit 1.3. If your answer is 1.12, submit 1.1.